Facebook's IPO, which raised $16 billion from investors, was the largest tech IPO in history. This article provides some significant insights into the IPO. Facebook's founder retained on 18% of the shares issued but he controls 57% of the voting shares. This pattern of dual shares was started by Google and it has been followed by many tech start up's since that time. This decreases the ability of shareholders to hold management accountable for short term performance, which may be a good thing, but it raises a question about why they permit it to happen. The answer is that there is too much money chases after too few investment opportunities. Investors, chasing yields, are forced to take the deals that are on offer.
Since Facebook has enough profit to fund its growth, another question is raised. Why did it go public? The $16 billion will probably be invested in treasuries. Apparently, it gives the founders a chance to get an early payout without losing control of the company. This raises a more critical question. Is the stock market becoming less central to American capitalism?
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